The cryptocurrency exchange Binance has announced a partnership with Spanish bank BBVA for storing customers' crypto assets under more secure conditions.
Partnership with BBVA
According to a recent report by the Financial Times, Binance has chosen Spain's third largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), as one of its independent custodians. This partnership will allow exchange customers to store their funds in U.S. Treasuries, which Binance will then accept as margin for trading.
Reasons for the New Approach
Binance's strategy is aimed at preventing issues similar to those that occurred with FTX. Insiders report that the exchange wants to reduce the volume of assets held on the platform to avoid a 'hypothetical FTX 2.0' scenario. This collaboration with banks also meets traders’ needs, as some prefer to use third parties to secure their funds.
Lessons from the FTX History
The collapse of FTX was largely due to the lack of third-party custody, allowing customer assets to be mixed with corporate resources. When FTX went bankrupt, many investors were left without access to their funds. Consequently, more traders are opting for independent custody options to avoid situations similar to FTX.
Binance's collaboration with BBVA is a step towards improving the security of crypto asset storage and underscores the importance of transparency and the separation of client funds from corporate ones.
